BENGALURU (Reuters) – Tyre manufacturer Goodyear India reported a higher quarterly profit as a drop in raw material prices helped make up for its first revenue fall in 12 quarters on low demand.
The Indian unit of U.S.-based Goodyear Tire and Rubber Co said standalone profit rose 4% to 392.6 million rupees ($4.8 million) in the first quarter.
While revenue from operations fell about 12% to 7.2 billion rupees, that was more than offset by a roughly 13% drop in expenses due to lower raw material prices.
Rubber prices, a key raw material for the tyre industry, have fallen by about 20%-25% over the last year through May, according to HDFC Securities.
However, Goodyear’s revenue was hurt by lower sales volumes due to subdued demand and index-based price reduction to vehicle makers, the company said.
The company sells tyres to both car and other passenger vehicle makers as well as to commercial vehicle makers, especially tractor makers, whose sales have suffered this quarter.
While automaker Maruti Suzuki India reported strong sales, the likes of Mahindra and Mahindra and Escorts Kubota have reported a drop in tractor sales.
“While the current economic environment remains challenging, we expect the industry to bounce back, specially in the light of good monsoon which should help stimulate the rural demand”, said Goodyear India Chairman and Managing Director Sandeep Mahajan.
The company’s larger rival CEAT, however, reported a near 16-fold jump in profit as rubber prices fell and demand for passenger vehicles climbed. MRF and JK Tyre will report results later this week.
Goodyear India’s shares ended the day nearly 3% lower, ahead of the results, but have gained 24.5% so far this year. CEAT’s shares have surged nearly 50% in that period, while MRF has risen 16% and JK Tyre 38%.
Goodyear Tire and Rubber will report its quarterly results later in the day. ($1 = 82.5440 Indian rupees)
(Reporting by Ashish Chandra in Bengaluru; Editing by Savio D’Souza)
